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001 A000000 PRINCIPAL CAPITAL ACCUMULATION FUND, INC.
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020 A000003 GOLDMAN SACHS CO
020 B000003 13-5108880
020 C000003 8
020 A000004 MORGAN STANLEY & CO
020 B000004 13-2655998
020 C000004 7
020 A000005 WEEDEN & CO
020 B000005 13-3287114
020 C000005 7
020 A000006 JONES & ASSOCIATES INC
020 B000006 95-3583143
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<PAGE> PAGE 2
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SIGNATURE A S FILEAN
TITLE VICE PRES/SECRETARY
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 209649466
<INVESTMENTS-AT-VALUE> 284582052
<RECEIVABLES> 770283
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 23955
<TOTAL-ASSETS> 285376290
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 145081
<TOTAL-LIABILITIES> 145081
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 209311352
<SHARES-COMMON-STOCK> 8242195
<SHARES-COMMON-PRIOR> 6869636
<ACCUMULATED-NII-CURRENT> 76658
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 910613
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 74932586
<NET-ASSETS> 285231209
<DIVIDEND-INCOME> 5969682
<INTEREST-INCOME> 376777
<OTHER-INCOME> 0
<EXPENSES-NET> (1151402)
<NET-INVESTMENT-INCOME> 5195057
<REALIZED-GAINS-CURRENT> 13829214
<APPREC-INCREASE-CURRENT> 42661757
<NET-CHANGE-FROM-OPS> 61686028
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (5118399)
<DISTRIBUTIONS-OF-GAINS> (20307620)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2210809
<NUMBER-OF-SHARES-REDEEMED> (1615306)
<SHARES-REINVESTED> 777056
<NET-CHANGE-IN-ASSETS> 80212681
<ACCUMULATED-NII-PRIOR> 35319
<ACCUMULATED-GAINS-PRIOR> 7389004
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1124855
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1151402
<AVERAGE-NET-ASSETS> 243934112
<PER-SHARE-NAV-BEGIN> 29.84
<PER-SHARE-NII> .68
<PER-SHARE-GAIN-APPREC> 7.52
<PER-SHARE-DIVIDEND> (.67)
<PER-SHARE-DISTRIBUTIONS> (2.76)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 34.61
<EXPENSE-RATIO> .47
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
Report of Independent Auditors on Internal Control
The Board of Directors and Shareholders
Principal Capital Accumulation Fund, Inc.
In planning and performing our audit of the financial statements of Principal
Capital Accumulation Fund, Inc. for the year ended December 31, 1997, we
considered its internal control, including control activities for safeguarding
securities, in order to determine our auditing procedures for the purpose of
expressing our opinion on the financial statements and to comply with the
requirements of Form N-SAR, not to provide assurance on internal control.
The management of Principal Capital Accumulation Fund, Inc. is responsible for
establishing and maintaining internal control. In fulfilling this
responsibility, estimates and judgments by management are required to assess the
expected benefits and related costs. Generally, controls that are relevant to an
audit pertain to the entity's objective of preparing financial statements for
external purposes that are fairly presented in conformity with generally
accepted accounting principles. These controls include the safeguarding of
assets against unauthorized acquisition, use or disposition.
Because of inherent limitations in internal control, errors or irregularities
may occur and not be detected. Also, projection of any evaluation of internal
control to future periods is subject to the risk that it may become inadequate
because of changes in conditions or that the effectiveness of the design and
operation may deteriorate.
Our consideration of internal control would not necessarily disclose all matters
in internal control that might be material weaknesses under standards
established by the American Institute of Certified Public Accountants. A
material weakness is a condition in which the design or operation of specific
internal control components does not reduce to a relatively low level the risk
that errors or irregularities in amounts that would be material in relation to
the financial statements being audited may occur and not be detected within a
timely period by employees in the normal course of performing their assigned
functions. However, we noted no matters involving internal control, including
control activities for safeguarding securities, that we consider to be material
weaknesses as defined above as of December 31, 1997.
This report is intended solely for the information and use of management and the
Board of Directors of Principal Capital Accumulation Fund, Inc. and the
Securities and Exchange Commission.
/S/ ERNST & YOUNG LLP
Des Moines, Iowa
January 16, 1998
SPECIAL MEETING OF SHAREHOLDERS PRINCIPAL CAPITAL ACCUMULATION FUND, INC.
HELD SEPTEMBER 16, 1997
1. Election of the Board of Directors.
For Withheld
Davis 7,339,623 129,278
Ehrle 7,313,601 155,299
Ferguson 7,340,841 128,060
Gilbert 7,340,640 128,261
Griswell 7,347,206 121,695
Jones 7,344,301 124,600
Keller 7,344,960 123,941
Lukavsky 7,327,340 141,560
Peebler 7,335,895 133,006
2. Ratification of selection of Ernst & Young LLP as independent public
auditors.
In Favor Opposed Abstain
7,287,315 50,753 130,833
3. Approval of change of fund structure. Name changed to Principal Variable
Contract Fund, Inc. Capital Value Account effective 1/1/98.
In Favor Opposed Abstain
7,045,780 180,804 242,316
4. Approval of elimination of the fundamental investment restriction regarding
the purchase of shares of other investment companies.
In Favor Opposed Abstain
7,052,550 194,550 221,801
5. Approval of elimination of the fundamental investment restriction
prohibiting joint participation in any securities trading account.
In Favor Opposed Abstain
7,033,564 189,251 246,086
6. Approval of change to investment restrictions regarding purchase of
illiquid securities and investment in repurchase agreements, and
reclassification of these restrictions from fundamental to non-fundamental.
In Favor Opposed Abstain
6,745,602 455,544 267,754
